State companies not for public offering: Tanri

JAKARTA (JP): State Minister of the Empowerment of State Enterprises Tanri Abeng said yesterday that none of the 12 state firms to be privatized this fiscal year would be sold directly to the public.

Speaking at a discussion with the staff of the Attorney General's Office, the minister said the government would instead invite strategic partners to buy the companies' shares through direct placement.

"Selling the shares through IPO (initial public offering) when the capital market is sluggish will not benefit us. We would not get an appropriate return for our assets," Tanri said.

Tanri said selling the state companies' to strategic partners would be much more profitable not only because they were willing to pay handsomely but also because they have long-term investment plans.

The government plans to privatize 12 of the 159 companies under the control of Tanri's office in the 1998/1999 fiscal year, and hopes to raise Rp 15 trillion to support the strained state budget from the sales.

It announced early this year that it would divest its holdings in five listed firms and sell a portion of its shares in another seven unlisted state companies.

At present six of the 12 firms are listed on local stock exchanges: telecommunications company's Telkom and Indosat, tin miner Tambang Timah, gold and nickel miner Aneka Tambang, cement producer Semen Gresik and Bank Negara Indonesia.

The remaining six firms which will be listed on the stock market are steelmaker PT Krakatau Steel; port infrastructure firm and operator PT Pelindo II and PT Pelindo III; toll road operator PT Jasa Marga, oil palm plantation company PT Perkebunan Nusantara IV, coal miner PT Tambang Batubara Bukit Asam, and airport management firm PT Angkasa Pura II.

At yesterday's forum, Tanri reiterated the urgency of restoring a stable political and social environment in the country.

"It is hard for us to attract investors if we do not follow the approved rules of the game and legal process to restore their confidence," he said.

He said the mushrooming of social unrest, such as the looting of plantations, and weak legal system would not attract investors.

Tanri, who is also chairman of the State Enterprises Management Agency, said his office would implement a new management system to restore other ailing state companies currently under his restructuring program.

He said state firms would undergo two programs: operational improvements and restructuring.

The firms' key executives would lead the operational program, focusing on improving the company's efficiency and renegotiate existing contracts which are burdening companies.

The restructuring program would be led by an interdepartmental team which would include officials from the firms' technical ministry and the National Development Planning Board. (das)